Remortgage and Removal of name
Discussion
Hi All,
Was wondering if any of you could assist.
Myself and my partner have a buy-to-let which we would like to remortgage and draw some funds out for a purchase of another property.
Myself, partner and her father are the names on the property and my partners father would like to take his name off the property.
We would like to know if there are any fees to be paid for this and if it is a straightforward process.
Example - Capital Gains tax, Stamp Duty etc....
Thanks in advance.
Peter
Was wondering if any of you could assist.
Myself and my partner have a buy-to-let which we would like to remortgage and draw some funds out for a purchase of another property.
Myself, partner and her father are the names on the property and my partners father would like to take his name off the property.
We would like to know if there are any fees to be paid for this and if it is a straightforward process.
Example - Capital Gains tax, Stamp Duty etc....
Thanks in advance.
Peter
pthoma888 said:
Hi All,
Was wondering if any of you could assist.
Myself and my partner have a buy-to-let which we would like to remortgage and draw some funds out for a purchase of another property.
Myself, partner and her father are the names on the property and my partners father would like to take his name off the property.
We would like to know if there are any fees to be paid for this and if it is a straightforward process.
Example - Capital Gains tax, Stamp Duty etc....
Thanks in advance.
Peter
Is he on the mortgage?Was wondering if any of you could assist.
Myself and my partner have a buy-to-let which we would like to remortgage and draw some funds out for a purchase of another property.
Myself, partner and her father are the names on the property and my partners father would like to take his name off the property.
We would like to know if there are any fees to be paid for this and if it is a straightforward process.
Example - Capital Gains tax, Stamp Duty etc....
Thanks in advance.
Peter
pthoma888 said:
Hi All,
Was wondering if any of you could assist.
Myself and my partner have a buy-to-let which we would like to remortgage and draw some funds out for a purchase of another property.
Myself, partner and her father are the names on the property and my partners father would like to take his name off the property.
We would like to know if there are any fees to be paid for this and if it is a straightforward process.
Example - Capital Gains tax, Stamp Duty etc....
Thanks in advance.
Peter
You need specific advice from a professional.......speak to a solicitor Was wondering if any of you could assist.
Myself and my partner have a buy-to-let which we would like to remortgage and draw some funds out for a purchase of another property.
Myself, partner and her father are the names on the property and my partners father would like to take his name off the property.
We would like to know if there are any fees to be paid for this and if it is a straightforward process.
Example - Capital Gains tax, Stamp Duty etc....
Thanks in advance.
Peter
pthoma888 said:
The purpose was for the purchase, as we could not do it just the two of us which was 8 years ago now.
OK, so if you were to remortgage now and the affordability etc is there without him, then fine, not a problem. Obviously you will have an arrangement in place with him over equity share etc, but the mortgage lenders have no interest in that. Your solicitor will facilitate his removal from the deeds, for which there will no doubt be a small fee, but a very routine procedure.In terms of other fees, it depends. Stamp duty will be payable on the new purchase, I assume this will also be a BTL? in which case you will have the standard 3% surcharge on it. Then you might have a fee for the new mortgage if you are getting a fix, plus normal solicitors.fees to transact the remortgage and the new property purchase. No CGT will be chargeable as you are not selling the existing property and realising any gain.
In general, if you are asking these type of questions, always try to provide as much relevant info as possible; even a small detail could make a lot of difference to any reply given.
Sorry to contradict the previous post, but there will be CGT and possibly IHT implications.
For CGT purposes, HMRC will deem your partner's father has sold his share of the property at market value. This is because you are related parties. Therefore, if he has made a gain on the property, tax may be due. Whether he has to pay tax on the gain depends on whether he has exceeded his CGT annual allowance. He may be able to avoid the CGT issue if he can prove he never had any beneficial interest in the property, e.g. he never received any rent from the property and/or he was never going to make any profit, e.g. gain.
Also, if the value of the property he transfers is more than 4 x the annual CGT allowance (currently £11,300), and he isn't required to complete a tax return, he needs to declare it to HMRC. If he's required to complete a tax return he has to declare it regardless of the transfer value.
Regarding IHT, the transfer of his share at less than market value will cause it to be a gift. Therefore, this will stay as part of his estate until 7 years after the date he gave the gift.
For CGT purposes, HMRC will deem your partner's father has sold his share of the property at market value. This is because you are related parties. Therefore, if he has made a gain on the property, tax may be due. Whether he has to pay tax on the gain depends on whether he has exceeded his CGT annual allowance. He may be able to avoid the CGT issue if he can prove he never had any beneficial interest in the property, e.g. he never received any rent from the property and/or he was never going to make any profit, e.g. gain.
Also, if the value of the property he transfers is more than 4 x the annual CGT allowance (currently £11,300), and he isn't required to complete a tax return, he needs to declare it to HMRC. If he's required to complete a tax return he has to declare it regardless of the transfer value.
Regarding IHT, the transfer of his share at less than market value will cause it to be a gift. Therefore, this will stay as part of his estate until 7 years after the date he gave the gift.
uknick said:
Sorry to contradict the previous post, but there will be CGT and possibly IHT implications.
For CGT purposes, HMRC will deem your partner's father has sold his share of the property at market value. This is because you are related parties. Therefore, if he has made a gain on the property, tax may be due. Whether he has to pay tax on the gain depends on whether he has exceeded his CGT annual allowance. He may be able to avoid the CGT issue if he can prove he never had any beneficial interest in the property, e.g. he never received any rent from the property and/or he was never going to make any profit, e.g. gain.
Also, if the value of the property he transfers is more than 4 x the annual CGT allowance (currently £11,300), and he isn't required to complete a tax return, he needs to declare it to HMRC. If he's required to complete a tax return he has to declare it regardless of the transfer value.
Regarding IHT, the transfer of his share at less than market value will cause it to be a gift. Therefore, this will stay as part of his estate until 7 years after the date he gave the gift.
The OP did not state that the FIL would be taking any gains out of the property, only that he would be removing his name from the deeds.For CGT purposes, HMRC will deem your partner's father has sold his share of the property at market value. This is because you are related parties. Therefore, if he has made a gain on the property, tax may be due. Whether he has to pay tax on the gain depends on whether he has exceeded his CGT annual allowance. He may be able to avoid the CGT issue if he can prove he never had any beneficial interest in the property, e.g. he never received any rent from the property and/or he was never going to make any profit, e.g. gain.
Also, if the value of the property he transfers is more than 4 x the annual CGT allowance (currently £11,300), and he isn't required to complete a tax return, he needs to declare it to HMRC. If he's required to complete a tax return he has to declare it regardless of the transfer value.
Regarding IHT, the transfer of his share at less than market value will cause it to be a gift. Therefore, this will stay as part of his estate until 7 years after the date he gave the gift.
IHT was not something the OP asked about, or that I commented on.
You will note from my post above that I did ask the OP to provide as much information as possible, as otherwise the answers generated could be inaccurate. The information I provided has had to rely on assumptions which may or may not be correct.
Edited by DeepFriedMarsBar on Tuesday 1st August 09:56
As I said, if the FIL is on the deeds and wishes to be removed this will be considered a sale/transfer to a related party by HMRC and will need the FIL to follow HMRC CGT procedures.
I did say the FIL may be able to avoid any CGT liability if he can prove he has no beneficial in the property, but I'm guessing nothing of any legal standing currently exists to confirm this. For example, a signed document between the three parties stating what will happen when one or more party wishes to remove themselves from the deeds.
However, if you have experience to the contrary, may I ask you post up the link where it says a related party transaction does not need to be disclosed for CGT purposes.
Regarding the IHT aspect, I agree he didn't specifically ask but it would remiss not to make the OP aware of how HMRC will treat the transfer.
I did say the FIL may be able to avoid any CGT liability if he can prove he has no beneficial in the property, but I'm guessing nothing of any legal standing currently exists to confirm this. For example, a signed document between the three parties stating what will happen when one or more party wishes to remove themselves from the deeds.
However, if you have experience to the contrary, may I ask you post up the link where it says a related party transaction does not need to be disclosed for CGT purposes.
Regarding the IHT aspect, I agree he didn't specifically ask but it would remiss not to make the OP aware of how HMRC will treat the transfer.
uknick said:
As I said, if the FIL is on the deeds and wishes to be removed this will be considered a sale/transfer to a related party by HMRC and will need the FIL to follow HMRC CGT procedures.
I did say the FIL may be able to avoid any CGT liability if he can prove he has no beneficial in the property, but I'm guessing nothing of any legal standing currently exists to confirm this. For example, a signed document between the three parties stating what will happen when one or more party wishes to remove themselves from the deeds.
However, if you have experience to the contrary, may I ask you post up the link where it says a related party transaction does not need to be disclosed for CGT purposes.
Regarding the IHT aspect, I agree he didn't specifically ask but it would remiss not to make the OP aware of how HMRC will treat the transfer.
"Guessing" being the operative word. As I have already stated twice, the OP has not provided enough information to provide a definitive answer.I did say the FIL may be able to avoid any CGT liability if he can prove he has no beneficial in the property, but I'm guessing nothing of any legal standing currently exists to confirm this. For example, a signed document between the three parties stating what will happen when one or more party wishes to remove themselves from the deeds.
However, if you have experience to the contrary, may I ask you post up the link where it says a related party transaction does not need to be disclosed for CGT purposes.
Regarding the IHT aspect, I agree he didn't specifically ask but it would remiss not to make the OP aware of how HMRC will treat the transfer.
DeepFriedMarsBar said:
"Guessing" being the operative word. As I have already stated twice, the OP has not provided enough information to provide a definitive answer.
Just to be clear I'm not commenting on how much gain may be liable to tax, or even there was a gain. As you say, we won't know this without the full story. But that is irrelevant to my point about disclosure.Your original post was clearly incorrect under the CGT rules when you made the statement;
"No CGT will be chargeable as you are not selling the existing property and realising any gain."
The OP may have taken that to read you don't have to tell HMRC anything as there is no gain to declare. If they didn't think that then fair enough. But the advice you gave was misleading and didn't make clear HMRC need to be informed of the disposal. Failure to do so could result in HMRC imposing a fine on the father for failing to declare.
Whether or not he makes a gain is irrelevant to the declaration.
Now, if you are a tax professional, accountant or solicitor versed in CGT and other taxes relating to asset disposals, and you do have experience that makes your above quoted comment correct then please provide a link and I'll apologise for doubting your advice. However, in the 20 years or so I've been an accountant I've never come across anything to support your claim.
uknick said:
Just to be clear I'm not commenting on how much gain may be liable to tax, or even there was a gain. As you say, we won't know this without the full story. But that is irrelevant to my point about disclosure.
Your original post was clearly incorrect under the CGT rules when you made the statement;
"No CGT will be chargeable as you are not selling the existing property and realising any gain."
The OP may have taken that to read you don't have to tell HMRC anything as there is no gain to declare. If they didn't think that then fair enough. But the advice you gave was misleading and didn't make clear HMRC need to be informed of the disposal. Failure to do so could result in HMRC imposing a fine on the father for failing to declare.
Whether or not he makes a gain is irrelevant to the declaration.
Now, if you are a tax professional, accountant or solicitor versed in CGT and other taxes relating to asset disposals, and you do have experience that makes your above quoted comment correct then please provide a link and I'll apologise for doubting your advice. However, in the 20 years or so I've been an accountant I've never come across anything to support your claim.
Do you also hold a qualification in pedantry? If not, perhaps you should take one, I'm sure you would achieve chartered standard quite easily.Your original post was clearly incorrect under the CGT rules when you made the statement;
"No CGT will be chargeable as you are not selling the existing property and realising any gain."
The OP may have taken that to read you don't have to tell HMRC anything as there is no gain to declare. If they didn't think that then fair enough. But the advice you gave was misleading and didn't make clear HMRC need to be informed of the disposal. Failure to do so could result in HMRC imposing a fine on the father for failing to declare.
Whether or not he makes a gain is irrelevant to the declaration.
Now, if you are a tax professional, accountant or solicitor versed in CGT and other taxes relating to asset disposals, and you do have experience that makes your above quoted comment correct then please provide a link and I'll apologise for doubting your advice. However, in the 20 years or so I've been an accountant I've never come across anything to support your claim.
The OP didn't ask about making declarations to HMRC, any more than he asked about IHT. The information I provided was correct for the question asked.
No need to be rude; I was merely pointing out your statement I quoted about CGT is wrong.
However, you're right about tax and pedantry. It is vital you understand all the ins and outs of the rules to a) make sure you don't fall foul of them and b) make best use of them to minimise any tax you might have to pay.
So, yes I'm guilty on that count.
On a final point, if the OP had taken tax advice before they bought the property (which they couldn't have done or they wouldn't have been posting) this would never have been an issue. A couple of hundred £ eight years ago could possibly save thousands today.
However, you're right about tax and pedantry. It is vital you understand all the ins and outs of the rules to a) make sure you don't fall foul of them and b) make best use of them to minimise any tax you might have to pay.
So, yes I'm guilty on that count.
On a final point, if the OP had taken tax advice before they bought the property (which they couldn't have done or they wouldn't have been posting) this would never have been an issue. A couple of hundred £ eight years ago could possibly save thousands today.
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